Look who's driving design
Toyota's new Scion points to a new industry premise: Boomers may hold the wealth, but brand-loyal youths hold the key to a carmakers' long-term success.
The Scion is not your father's Toyota. But he might have bought one if it had been around when he was a young buck.
Or so Toyota believes.
The boxy vehicle introduced this month in California represents the giant automaker's first major launch since its Lexus line more than 10 years ago. More important, it represents a bid for young buyers - an aggressive move to address its concern that a key demographic is shunning the brand.
"These [young] customers won't look at a Toyota, because you see them everywhere," says James Farley, president of Scion, also the name for the newest division of Toyota Motors North America.
Similar concerns pervade many business sectors today - and have been especially acute in the auto industry since the fall of Oldsmobile, which simply couldn't find enough buyers under 70 years old.
That failure - and the struggles of American firms from J.C. Penney to Levi Strauss - is forcing marketers to revive the perennial question: What do kids want? Companies from corner boutiques to global conglomerates are all trying to influence tomorrow's adults about what the next big trend should be.
Toyota's saga illustrates the sway young consumers hold. In addition to recasting its image, the carmaker is trying to persuade trendsetting teens and young adults - consumers who traditionally buy used cars - to buy their next vehicles right out of the showroom.
"It's really arrogant, actually, that we're trying to tell trendsetters what to do," says Mr. Farley.
If Scion succeeds, Toyota stands to secure brand loyalty. It also hopes that the tastes of its newest buyers may be adopted by mainstream consumers and produce a big, long-lasting payday. The carmaker's long-term aim is to pass General Motors as the world's No. 1 seller.
But to succeed, it will have to work quickly to capture current and future buyers in the largest and most diverse generation in US history: Generation Y. That group, when expanded to include so-called millennials - people ages 8 to 23 - encompasses some 60 million people.
"These generations are going to have to get shorter and shorter as the culture speeds up," says Carolyn Martin, faculty dean of Rainmaker Thinking, a think tank working on generational issues. People close in age "don't have anything in common culturally."
Automakers, with their long development cycles, are at an even greater disadvantage than many merchants who've grown up with baby-boomer customers. To catch trends early enough, they have to look to the very fringes of the culture to pick up on the next big thing, says Watts Wacker, a futurist and president of FirstMatter, a think tank in Westport, Conn.
"Trends are born in nasty, nasty places," he says. And if a company wants to find the next trend before it emerges, "they have to hire a deviant to take them to 'deviant land.' " If trucks are now mainstream, for example, and retro vehicles are trendy, "sleeping in your car is on the fringe," he says.
But even after all the focus groups and trips to 'deviant land,' Farley and his team have come up with a car that they think will satisfy these kids. The problem is, middle-aged executives admit they have no innate sense of whether they've hit the mark. "I'm 40, and I don't get the xB," Farley says of Scion's flagship model.
The xB can be described as a tiny mobile breadbox, a toaster on wheels, or a Matchbox-size SUV. The other model, the xA, is similar and even smaller. Farley says both vehicles are not anti-SUVs, but urban, alternative SUVs.
Regardless, automakers are hoping young folks will latch onto anything that looks industrially ugly. Think Honda Element, Toyota Matrix, Pontiac Aztek, and Suzuki Aerio.
The problem is that historically, youths reject what grownups like. To make matters worse, many times what kids like, adults do, too - which in turn drives away the youth market.
Many recent attempts to capture the youth market - mini SUVs, the Ford Focus, and the Toyota Echo, for example - have been co-opted by older people, says Art Spinella, president of CNW Marketing Research in Bandon, Ore., which focuses on the auto industry.
So small armies of marketing gurus are trying to figure out what young people want that grownups don't.
The answer may be simple: What young adults have always wanted. Extending respect, say experts, is the minimum requirement to do business with today's youth. Acknowledging individuality is the selling point.
On top of that, they demand "authenticity," evidence that a brand is of quality and has staying power, says marketing guru Marian Salzman, the author of "Buzz: Harness the Power of Influence and Create Demand."
Still, marketing provides an important wedge for building wider acceptance among youths. Running TV commercials is no longer enough.
Marketers now hold events where young people hang out. And they bring plenty of free samples - sorry, not cars, just key chains or logo-embroidered hats. The idea: Imprint a brand on the youth culture's most active players, and let them do the rest.
Pretrends are born on the "lunatic fringe," says Ms. Salzman, echoing Wacker. From there "alphas" - like the lead dog in a pack - weed out the good from the bad and begin adopting something.
But even this doesn't make a trend, she says. Afterward "bees" must pick up the ideas like pollen and spread them throughout the culture.
These are the Gen-Y trendsetters that designers of brands like Scion hope to attract. These grass-roots marketing efforts give a product respect and authenticity among peers without undermining respect for the company, says Ms. Salzman.
Of course, experts agree that companies must follow up on their marketing blitzes by delivering products that fulfill real needs.
"These kids don't know what crank windows are," says Farley. Not only do vehicles have to include every luxury feature imaginable, they also have to be able to do everything from racing off-road to carrying mountain bikes to supporting occasional slumber. Farley says that a quarter of Gen-Yers keep a change of clothes in their cars at all times.
Beyond that, members of Gen-Y want affirmation of their individuality.
"Youths want something that sticks out a little, that says 'I've got something you don't,' " Farley says.
Looking at it, the xB certainly does that - especially once a buyer gets done "slamming" it with dealer accessories. Scion offers lots of factory customization, from big wheels and suspension kits to graphics on the paint and interior trim.
Whether that's enough to make it authentic is questionable, but at least the Scion comes with the factory warranty, so Generation Yers won't spend precious time and money maintaining it.
Certainly the Scion has received some attention. The xB, especially when modified, is reportedly mobbed at so-called "tuner" shows frequented by "fast and furious" 20-somethings, says Farley.
How many will buy it, though, is a different question. "Young people aren't buying new cars," says Mr. Spinella.
Youths' reasons for buying used vary. Some believe they can get a more luxurious or authentic brand name for less money, others because used cars will leave more cash for covering any customizations.
Still, this generation may be different. What these buyers want may be BMW cachet and luxury at the Scion's $14,000 price, Farley insists. They may also think they'll encounter less hassle if they buy something new.
And Toyota has tried to make the Scion easy to buy, with Internet kiosks in dealerships and a pledge from dealers to stick to advertised prices.
"Young consumers don't mind negotiating, but [not if] it takes too much time," says Farley.
Besides, Toyota's backing may give Scion another advantage: Parents may be more willing to help foot the bill. "Kids love us because we're different," says Farley. "Parents love us because we're Toyota."